BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
578 (Wright)
Hearing Date: 05/26/2009 Amended: 04/21/2009
Consultant: Jacqueline Wong-HernandezPolicy Vote: Judiciary 5-0
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BILL SUMMARY: SB 578 provides that interest accrual for child
support arrears that have been assigned to the state by
recipients of welfare cash assistance shall be suspended during
those months in which the obligor has paid the current month's
court-ordered payments of current support and arrears.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
Increased payments Unknown potential for
increased revenue General
Loss of interest accrual Possible long term revenue
loss General
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STAFF COMMENTS:
This bill incentivizes the obligor to "keep current" with the
payment of court-ordered child support and arrears, by
suspending the interest (that would otherwise continue to accrue
on the balance) during the months when payments are made in
full, and on time. To the degree that this increases payments of
child support and arrears, additional revenue would be generated
for the state in the short term. In the long term, the state
will lose interest revenue that it would have otherwise been
owed (to the degree it could ever be recovered). Implementing
this bill requires a one-time change to the California Child
Support Automation System (CCSAS), that the department will
absorb within its existing budget for system changes.
Existing law allows the state to collect and child support on
behalf of a custodial parent enrolled in CalWORKs to offset the
aid given to the family. A CalWORKs child support case is opened
when a custodial parent applies for and receives CalWORKs
benefits. The Department of Social Services (DSS) informs the
Department of Child Support Services (DCSS) when CalWORKs
benefits are granted, and a child support case is opened by the
DCSS. As a condition of receiving CalWORKs benefits, the
custodial party automatically assigns all rights to child,
spousal, and medical support to the county up to the amount of
aid paid. This includes all current and past-due support and
continues as long as a family is receiving aid. Any current
child support payments which exceed the amount of aid paid will
be sent to the custodial party.
Currently, interest on non-welfare arrears is not suspended or
waived unless the custodial parent to whom the arrears are owed
has provided written consent to do so. This bill would suspend
interest accrual on arrears that have been assigned to the state
in cases where the family is receiving CalWORKS benefits. Once
a family discontinues
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SB 578 (Wright)
public assistance, the only arrearage type eligible for interest
suspension would be the
arrears that accrued during the period of time the family
received cash aid. Interest accrues at a rate of 10% annually.
The accrual of interest only results in additional money to the
state when it can be collected. Because the state can
automatically garnish wages and collect against personal income
tax returns, the accounts likely to be affected by this bill are
the ones already most difficult to collect. DCSS believes this
bill will generate the revenue estimated below.
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| |Cases w/ Current & Arrears Due | FFY 2008 |
|-+-----------------------------------------+-----------|
| |Cases w/ current & arrears due | |
| | | 208,974 |
|-+-----------------------------------------+-----------|
| | Cases not paying toward current | |
| |support (31.95%) | 66,762 |
| | | |
|-+-----------------------------------------+-----------|
| | Assume 24.61% are assistance | |
| |(current or former) | 16,430 |
| | | |
|-+-----------------------------------------+-----------|
| | Assume 10% would begin paying | |
| |monthly support due | |
| | |1,643 |
|-+-----------------------------------------+-----------|
| | Avg. annual current collection per | $2,676|
| |case | |
|-+-----------------------------------------+-----------|
| |Increased Current Collections per Year | $4,396,047|
|-+-----------------------------------------+-----------|
| | GF Share (of Assistance Only)| $1,963,988|
|-+-----------------------------------------+-----------|
| | | |
|-+-----------------------------------------+-----------|
| |Cases to begin paying on current & | |
| |arrears | |
| | |1,643 |
|-+-----------------------------------------+-----------|
| | Assume 10% will pay add'l. toward | |
| |arrears | |
| | |164 |
|-+-----------------------------------------+-----------|
| | Assume 20% increase on avg. annual | |
| |current pmt. (for arrears) | |
| | |535 |
|-+-----------------------------------------+-----------|
| |Increased Arrears Collections per Year | $87,921|
|-+-----------------------------------------+-----------|
| | GF Share (of Assistance Only)| $39,280|
|-+-----------------------------------------+-----------|
| | | |
|-+-----------------------------------------+-----------|
| |$50 Disregard for Current Assistance | |
| |Cases | |
|-+-----------------------------------------+-----------|
| | Cases to begin paying on current & | |
| |arrears | |
| | |1,643 |
|-+-----------------------------------------+-----------|
| | Assume 34.06 % are currently | |
| |assisted | |
| | |560 |
|-+-----------------------------------------+-----------|
| | $50 Disregard | -$50|
|-+-----------------------------------------+-----------|
| |Increased Cost for $50 Disregard (Asst. | ($27,980)|
| |Share) | |
|-+-----------------------------------------+-----------|
| | GF Share (50% for Disregard)| ($13,990)|
|-+-----------------------------------------+-----------|
| | | |
|-+-----------------------------------------+-----------|
| |Net Increase for Cases w/ Current & |$4,455,988 |
| |Arrears due | |
|-+-----------------------------------------+-----------|
| | GF Share (of Assistance Only)|$1,989,277 |
| | | |
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